As the inexorable trend toward globalization continues, the role of the cash manager of an enterprise grows more and more complex day by day. New subsidiaries or other entities are formed, new entities are acquired or divested, new foreign assets become accessible, currency rates change, new regulations become effective, and so on.
The legacy model, where a cash manager checks the balances of bank accounts and makes daily investment and/or position-covering decisions, is coming to the end of its usefulness. Now, a cash manager needs to know not only the cash balances at his or her bank or banks, but also needs to know what transactions are expected to hit which bank or banks, and when. For example, while a morning check of a bank account indicates a positive balance of $1,000,000, it might be the case that that particular day is a payday, and processing payroll via ACH from that account would deplete the account by $850,000, leaving only $150,000 to cover other transactions of that day. That might be enough, or it might not be enough—and the bank is utterly unable to provide an accurate forecast of intra-day changes, and the bank is utterly unable to provide an accurate forecast of balances as of the close of the business day, much less forecast further into the future.
Enterprises often have visibility into transactions of a given day (and/or in the future) as a natural benefit of having enterprise software applications. Although the banks are able to provide an up-to-date balance of a particular account, the cash manager needs much more visibility into upcoming transactions (e.g., including any scheduled deposits or withdrawals). Moreover, an enterprise may be comprised of many entities (e.g., a domestic subsidiary, a foreign subsidiary, etc.) and may have many banks and many bank accounts for various purposes—and each account subject to moment-by-moment transactions.
What is needed is a technique or techniques that amalgamate information retrieved from many external sources (e.g., banks, currency exchanges, etc.) and from many internal sources (e.g., accounts payable, accounts receivable etc.) to calculate a current cash position, forecast a daily cash position, and present cash positions to the cash manager in an easy to access form (e.g., in a summary chart accessible from a mobile terminal). Moreover, what is needed is a technique or techniques that provide such forecasted cash positions whenever changes are detected in the conditions that influence the forecast.
None of the aforementioned legacy approaches achieve the capabilities of the herein-disclosed techniques for cash position forecasting using real-time analytics. Therefore, there is a need for improvements.